USD/CAD loses momentum before testing 1.33 handle
After reaching its two-day high at 1.3294, the USD/CAD lost some traction and gave back some of its daily gains. As of writing, the pair was trading at 1.280, up 35 pips, or 0.27% on the day.
The broad-based greenback strength is the primary reason behind the pair's upsurge on Thursday. Yesterday's hawkish statement from the FOMC and Chairwoman Yellen's optimistic remarks helped the greenback gain traction, pushing the US Dollar Index towards the mid-97s. At the moment, the index is at 97.41, up 0.52% on the day. Furthermore, today's macro data from the United States provided an additional boost for the greenback as well. Initial Jobless Claims fell to 237K from 245K for the week ending June 9, and the NY Empire State Manufacturing Index recorded a substantial increase to 19.8 in June from -1 in May.
- US: Weekly initial claims was 237,000, a decrease of 8,000 from the previous week
- NY Fed: Business activity rebounded strongly
On the other hand, despite a higher than expected reading of Manufacturing Shipment in Canada, the loonie failed to gather any recovery momentum as the barrel of West Texas Intermediate continues to be priced below the $45 mark, struggling to retrace its recent losses.
- Oil prices weighed down by supply - AmpGFX
Technical outlook
With today's rise, the RSI on the daily graph finally corrected its oversold reading as it rose above the 30 mark for the first time since the start of the week. 1.3300 (psychological level) is the immediate resistance ahead of 1.3365 (200-DMA) and 1.3430 (20-DMA). On the flip side, 1.3165 (Jun. 14 low) remains as a critical support. With a clean break below that level, the pair could aim for 1.3100 (psychological level) and 1.3010 (Feb. 16 low).
- USD/CAD: Divergent signals - Westpac
- USD/CAD bearish with caution near term – Scotiabank